Ethiopia, Long Mired in Poverty, Rides an Economic Boom

Construction at a station on a metro line through Addis Ababa, one of a series of infrastructure projects that Ethiopia, once mired in poverty, hopes will help it mimic Asia’s industrial rise.Credit
Tiksa Negeri/Reuters

ADDIS ABABA, Ethiopia — The bulldozers, tractors and cranes are busy day and night, paving new roads, building tall glass buildings and constructing a new light rail system to stitch together the city’s ends.

In less than five years, the city’s skyline has changed drastically. Above the dust, in a seven-story building overlooking Meskel Square, sits Abiy Gebeyehu, a real estate development manager at the Sunshine Construction Company. He is going through files and figures, looking down at the spot where Ethiopia’s former communist dictator, Mengistu Haile Mariam, once smashed to the ground three bottles of what was supposedly blood as a warning to his opponents.

“The government changed its policy,” Mr. Gebeyehu said, explaining how his company became part of Ethiopia’s economic growth. “They are engaging private business.”

Once the epitome of poverty and hunger, Ethiopia is changing. Three decades after a famine that prompted America’s top singers to respond with “We Are the World,” Ethiopia has had an average economic growth rate of 10 percent for over a decade and has met or is coming close to meeting several important Millennium Development Goals of the United Nations, according to the World Bank.

Some economists have called Ethiopia an “African lion,” mimicking the success stories of Asia’s economic tigers, and the government here has an ambitious plan to make Ethiopia a middle-income country by 2025.

It sometimes seems that everything here in the capital is under construction. Head out on one road in the morning and you might find it blocked off for a development project by evening. The thumping of jackhammers, the sight of men in orange vests, and the comments of Ethiopians who are at once infuriated by the inconvenience and impressed with their country’s transformation are constant.

But critics of Ethiopia’s economic growth story point to human rights abuses (some carried out in the name of economic development) and the lack of genuine democracy, and they question the sustainability of the nation’s economic path.

“When a society is not free, development is not as sustainable,” said Obang Metho, executive director of the Solidarity Movement for a New Ethiopia, an advocacy group. “It is not investment in building the human capacity of the people, but only in infrastructure and opportunities that mostly benefit the narrow interests of regime cronies.”

By no means has Addis Ababa eliminated the problems found in many developing capitals. Tin houses in shanty neighborhoods can still be seen around town, electricity cuts are common, the Internet is frustratingly slow and telecommunications are largely not reliable.

“The overall performance,” however, said Guang Z. Chen, the World Bank’s country director here, “remains impressive.”

There are many reasons for the boom, but analysts attribute part of the growth to the idea of “the developmental state,” championed by former Prime Minister Meles Zenawi in his writings, as the framework in which the current economy functions.

“The idea is a state with a sense of mission,” said Dereje Feyissa Dori, Africa research director at the International Law and Policy Institute, who is based in Addis Ababa. “It is building capitalism from above.”

Following the examples of countries like South Korea and China, he said, the government is heavily involved in the economy, directing the private sector. It has expanded in the areas of services, public investment, infrastructure, education and health by borrowing heavily from state-owned banks and effectively managing foreign development aid from the United States, Britain and other parts of Europe.

An economy that once depended on coffee as a main source of income now sees its national carrier, Ethiopian Airlines, as the main generator of foreign exchange. The country is also constructing Africa’s largest hydropower plant, the Grand Ethiopian Renaissance Dam, which Ethiopian officials proudly claim will be built with the nation’s own financial might, not foreign assistance.

“Our struggle is to fight poverty,” said Haji Gendo, a spokesman for the Ministry of Finance and Economic Development. “We are targeting specific sectors.”

Remittances from the large Ethiopian diaspora and private investment from countries like China, India, Turkey, Sweden and Britain — attracted to the country’s low-cost labor market and proximity to Europe — have also contributed to the growing economy, especially in the textile and leather industries.

In an industrial zone on the outskirts of the capital, one of many throughout the country, Pittards, a British leather company, is manufacturing and exporting “Made in Ethiopia” gloves that include work gloves sold at Costco retailers in the United States and fashion gloves worn in Paris and Tokyo.

“Ethiopia was a natural choice,” said Reg Hankey, Pittards’s chief executive, citing the availability of raw materials, labor and proximity to global markets.

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Back in the lobby of Sunshine Construction, where a banner displays the company’s slogan, “Seeing Is Believing,” models of apartment complexes, villas, and new buildings and photographs of road construction adorn the place. Many of these buildings house government offices or are bought by Ethiopians returning from abroad.

But the development projects that are part of a government master plan to expand the capital into areas outside the city have bred anger and clashes, as well.

Last year, protests led to the deaths of at least nine students. And in other parts of the country, the displacement and relocations of populations for dam and big agriculture projects have also stirred discontent.

“While Ethiopia needs development, the government’s approach to development leaves no room for dissent or opposition to government policies,” said Felix Horne, a researcher for Human Rights Watch. “Throughout the country, citizens are routinely displaced for development projects, and there is little consultation or compensation given for the loss of their lands.”

The World Bank itself has come under fire for aiding the government despite such abuses. In the Gambella region, residents complained that they were forced off their ancestral lands by the government under the pretext of improving basic services.

But in a sleight of hand, residents said, they were moved to places with infertile ground, no schools and no clinics, while their own lands were leased off to investors.

“We draw important lessons from this case to better anticipate ways to protect the poor,” the president of the World Bank Group, Jim Yong Kim, said in a statement late last month.

An ally in the American fight against radical Islam in the region, Ethiopia hosts an American military base; is an island of relative stability in a tough neighborhood that includes Sudan, South Sudan and Somalia; and has largely been spared the type of terrorist attacks that have struck Kenya. The country has been able to turn its relative stability into diplomatic capital, hosting international peace talks for neighboring countries.

“We no longer have war,” said a cabdriver as he zigzagged his blue Soviet-made Lada through a traffic jam, explaining the roots of the economic boom as he passed a construction site.

Still, critics say the government is dominated by members of the Tigre ethnic group, does not tolerate dissent and manages a surveillance program to keep dissidents in check.

Elections are scheduled for this year, and Parliament is dominated by the governing Ethiopian People’s Revolutionary Democratic Front. Only one seat belongs to a member of the opposition.

“We have elections every five years, it is a multiparty state, but the practice is authoritarian,” Mr. Dori said. “And the opposition is in shackles.”

Last year, six bloggers and three journalists critical of government policies were arrested and charged with terrorism and connections to an outlawed United States-based opposition group that the government said was plotting attacks to overthrow it.

“I am not happy about the human rights situation in Ethiopia today,” said a lawyer for the bloggers, Ameha Mekonnen. “It is not uncommon to hear from detainees that torture is undergoing in many detentions centers.”

Some economists question how long Ethiopia’s model of state-driven capitalism can be sustained.

“This kind of economic model has worked very well for Ethiopia,” said Mr. Chen of the World Bank. “The question is, can you continue this model unchanged over the next 10 years? Our argument is no.”

Beyond that, many here debate whether development and democracy are necessarily interlinked.

“If people are hungry, they will not think of democracy or anything; they need bread,” said Mr. Gendo, the ministry spokesman.

Mr. Mekonnen, the lawyer, thought differently.

“If there is confidence between the government and the people, that would be better for development,” he said. “I don’t think there is that kind of trust, I am afraid.”

Correction: March 10, 2015

The Addis Ababa Journal article on Wednesday, about Ethiopia’s booming economy and the government’s efforts to make Ethiopia a middle-income country by 2025, misstated part of the name of the governing party. It is the Ethiopian People’s Revolutionary Democratic Front, not the Ethiopian People’s Revolutionary Party.

A version of this article appears in print on March 4, 2015, on Page A9 of the New York edition with the headline: Ethiopia, Former Resident of the Bottom, Aspires to the Middle. Order Reprints|Today's Paper|Subscribe